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General Motors Co. (NYSE:GM)


Analysis of Goodwill and Intangible Assets

Advanced level


Goodwill and Intangible Asset Disclosure

General Motors Co., balance sheet: goodwill and intangible assets

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Technology and intellectual property 734  734  8,092  8,399  8,263 
Brands 4,298  4,299  4,302  4,421  4,427 
Dealer network, customer relationships and other 966  968  1,310  1,356  1,346 
Intangible assets, gross carrying amount 5,998  6,001  13,704  14,176  14,036 
Accumulated amortization (2,520) (2,283) (9,712) (9,785) (9,460)
Intangible assets, net carrying amount 3,478  3,718  3,992  4,391  4,576 
Goodwill 1,859  1,861  1,857  1,868  1,371 
Goodwill and intangible assets, net 5,337  5,579  5,849  6,259  5,947 

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

Item Description The company
Intangible assets, net carrying amount Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. General Motors Co.’s intangible assets, net carrying amount decreased from 2017 to 2018 and from 2018 to 2019.
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Goodwill and intangible assets, net Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. General Motors Co.’s goodwill and intangible assets, net decreased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Goodwill

General Motors Co., adjustments to financial statements

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 228,037  227,339  212,482  221,690  194,520 
Less: Goodwill 1,859  1,861  1,857  1,868  1,371 
Total assets (adjusted) 226,178  225,478  210,625  219,822  193,149 
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 41,792  38,860  35,001  43,836  39,871 
Less: Goodwill 1,859  1,861  1,857  1,868  1,371 
Stockholders’ equity (adjusted) 39,933  36,999  33,144  41,968  38,500 

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).


General Motors Co., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

General Motors Co., adjusted financial ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover
Reported total asset turnover 0.54 0.59 0.63 0.71 0.75
Adjusted total asset turnover 0.54 0.59 0.63 0.71 0.76
Financial Leverage
Reported financial leverage 5.46 5.85 6.07 5.06 4.88
Adjusted financial leverage 5.66 6.09 6.35 5.24 5.02
Return on Equity (ROE)
Reported ROE 16.11% 20.62% -11.04% 21.51% 24.30%
Adjusted ROE 16.86% 21.66% -11.66% 22.46% 25.16%
Return on Assets (ROA)
Reported ROA 2.95% 3.53% -1.82% 4.25% 4.98%
Adjusted ROA 2.98% 3.55% -1.83% 4.29% 5.02%

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. General Motors Co.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
General Motors Co.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. General Motors Co.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. General Motors Co.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

General Motors Co., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Automotive net sales and revenue 122,697  133,045  133,449  156,849  145,922 
Total assets 228,037  227,339  212,482  221,690  194,520 
Activity Ratio
Total asset turnover1 0.54 0.59 0.63 0.71 0.75
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Automotive net sales and revenue 122,697  133,045  133,449  156,849  145,922 
Adjusted total assets 226,178  225,478  210,625  219,822  193,149 
Activity Ratio
Adjusted total asset turnover2 0.54 0.59 0.63 0.71 0.76

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

2019 Calculations

1 Total asset turnover = Automotive net sales and revenue ÷ Total assets
= 122,697 ÷ 228,037 = 0.54

2 Adjusted total asset turnover = Automotive net sales and revenue ÷ Adjusted total assets
= 122,697 ÷ 226,178 = 0.54

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. General Motors Co.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Financial Leverage

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 228,037  227,339  212,482  221,690  194,520 
Stockholders’ equity 41,792  38,860  35,001  43,836  39,871 
Solvency Ratio
Financial leverage1 5.46 5.85 6.07 5.06 4.88
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 226,178  225,478  210,625  219,822  193,149 
Adjusted stockholders’ equity 39,933  36,999  33,144  41,968  38,500 
Solvency Ratio
Adjusted financial leverage2 5.66 6.09 6.35 5.24 5.02

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

2019 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 228,037 ÷ 41,792 = 5.46

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 226,178 ÷ 39,933 = 5.66

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
General Motors Co.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to stockholders 6,732  8,014  (3,864) 9,427  9,687 
Stockholders’ equity 41,792  38,860  35,001  43,836  39,871 
Profitability Ratio
ROE1 16.11% 20.62% -11.04% 21.51% 24.30%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income (loss) attributable to stockholders 6,732  8,014  (3,864) 9,427  9,687 
Adjusted stockholders’ equity 39,933  36,999  33,144  41,968  38,500 
Profitability Ratio
Adjusted ROE2 16.86% 21.66% -11.66% 22.46% 25.16%

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

2019 Calculations

1 ROE = 100 × Net income (loss) attributable to stockholders ÷ Stockholders’ equity
= 100 × 6,732 ÷ 41,792 = 16.11%

2 Adjusted ROE = 100 × Net income (loss) attributable to stockholders ÷ Adjusted stockholders’ equity
= 100 × 6,732 ÷ 39,933 = 16.86%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. General Motors Co.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to stockholders 6,732  8,014  (3,864) 9,427  9,687 
Total assets 228,037  227,339  212,482  221,690  194,520 
Profitability Ratio
ROA1 2.95% 3.53% -1.82% 4.25% 4.98%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income (loss) attributable to stockholders 6,732  8,014  (3,864) 9,427  9,687 
Adjusted total assets 226,178  225,478  210,625  219,822  193,149 
Profitability Ratio
Adjusted ROA2 2.98% 3.55% -1.83% 4.29% 5.02%

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

2019 Calculations

1 ROA = 100 × Net income (loss) attributable to stockholders ÷ Total assets
= 100 × 6,732 ÷ 228,037 = 2.95%

2 Adjusted ROA = 100 × Net income (loss) attributable to stockholders ÷ Adjusted total assets
= 100 × 6,732 ÷ 226,178 = 2.98%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. General Motors Co.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.